<PAGE>

                                                                    EXHIBIT 10.5

                         LICENCE AGREEMENT (CASE #1243)

                                    Between

                    President and Fellows of Harvard College

                                      And

                                 NanoSys, Inc.

               Effective as of October 4, 2001 ("Effective Date")
                             Re: Harvard Case #1243

         In consideration of the mutual promises and covenants set forth below,
         the parties hereto agree as follows:

                                   ARTICLE I
                                  DEFINITIONS

         As used in this Agreement, the following terms shall have the following
         meanings:

1.1      ACADEMIC RESEARCH PURPOSE: use of PATENT RIGHTS solely for academic
         non-commercial research or other non-for-profit scholarly purposes,
         which use in undertaken at a non-profit or governmental institution.
         ACADEMIC RESEARCH PURPOSES does not include selling products covered by
         PATENT RIGHTS or using PATENT RIGHTS in researching, developing,
         producing or manufacturing products for sale, or performance of
         services a free or other financial consideration. It is understood that
         using the PATENT RIGHTS to conduct normal research activities at
         non-profit or governmental institution is within the defined term of
         ACADEMIC RESEARCH PURPOSE.

1.2      AFFILIATE: any entity which controls, is controlled by, or is under
         common control with a party. An entity shall be regarded as in control
         of another entity for purposes of this definition if it owns or control
         at least fifty percent (50%) of the shares entitled to vote in the
         election of directors (or in the case of an entity that is not a
         corporation, for the election of the corresponding managing authority).
         Unless otherwise specified, the term LICENSEE includes AFFILIATES.

1.3      FIELD: All fields of use.

1.4      HARVARD: President and Fellows of Harvard College, a nonprofit
         Massachusetts educational corporation having offices at the Office for
         Technology and Trademark

<PAGE>

         Licensing, Holyoke Centre, Suite 727, 1350 Massachusetts Avenue,
         Cambridge, Massachusetts 02138.

1.5      LICENSED PROCESSES: methods, processes or procedures covered by at
         least one VALID CLAIM included within the PATENT RIGHTS.

1.6      LICENSED PRODUCTS: products covered by at least one VALID CLAIM
         included within the PATENT RIGHTS or products made in accordance with
         LICENSED PROCESSES.

1.7      LICENSEE: Nanosys, Inc., a corporation organized under the laws of
         Delaware having its principal offices at CW Group East, 1041 Third
         Avenue, New York, New York 10021.

1.8      NET SALES: the amounts actually received for sales, leases, or other
         dispositions of LICENSED PRODUCTS to non-AFFILIATE third parties, less:

         (a) customary [*** Redacted] actually allowed and taken;

         (b) amounts [*** Redacted] by reason of [*** Redacted]

         (c) to the extent separately stated on purchase orders, invoices, or
             other documents of sale: (i) [*** Redacted] levied on the
             production, sale, transportation, delivery, importation,
             exportation or use of LICENSED PRODUCTS; (ii) charges for [***
             Redacted] provided by third parties, including any [*** Redacted]
             thereon.

         NET SALES also includes the fair market value of any non-cash
         consideration received for the sale, lease or other disposition of
         LICENSED PRODUCTS to non-AFFILIATE third parties; provided NET SALES
         shall not include any [*** Redacted] payments in consideration for the
         [*** Redacted] to the intellectual property of LICENSEE or third
         parties, including the [*** Redacted] hereunder, bona fide [***
         Redacted] made in good faith and any payments for [*** Redacted].

         In the event that a LICENSED PRODUCT is sold or leased as a combination
         product containing the LICENSED PRODUCT and one or more other
         components, NET SALES shall be calculated by multiplying the gross
         amount invoiced for the sale of the combination product by the fraction
         [*** Redacted] where A is the [*** Redacted] price of the LICENSED
         PRODUCT sold separately by LICENSEE, and B is the [*** Redacted] of
         such other components of the combination products sold separately by
         LICENSEE during the relevant royalty payment period.  In the event a
         substantial number of such separate sales were not made during the
         relevant royalty period, then NET SALES shall be reasonably allocated
         by LICENSEE between such LICENSED PRODUCT and such other components of
         the combination based on their relative importance or value; provided
         that such LICENSED PRODUCT and such other components shall not be
         considered a "combination product" unless such LICENSED PRODUCT and
         such other components are offered for sale or marketed by LICENSEE
         separately as well as together.

*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                                                               2

<PAGE>

1.9      PATENT RIGHTS: PATENT RIGHTS shall include (i) the applications and
         patents as listed in Appendix A of this Agreement, (ii) any foreign
         counterparts to such patents and patent applications, (iii) the
         inventions described and claimed in the foregoing, (iv) any divisions,
         continuations, substitution of the foregoing, and (v) specific claims
         of any continuations-in-part of the foregoing to the extent the
         specific claims are directed to subject matter described in the
         foregoing in a manner sufficient to support such specific claims under
         35 U.S.C. and to the extent Licensable by HARVARD, (vi) all patents
         issuing on any of the foregoing, and (vii) registrations, renewals,
         reissues, reexaminations, extensions or patents of addition of any kind
         with respect to any of such patents. For purposes of this Agreement
         "Licensable" shall mean those claims of continuations-in-parts filed
         after the Effective Date for which HARVARD has sole ownership (or has
         been granted the sole right to license by a co-owner) and where there
         are no obligations to grant licenses to a third party as the result of
         research support provided to one or more of the inventors.

1.10     SERVICE INCOME: the financial consideration actually received for the
         utilization of LICENSED PRODUCTS or LICENSED PROCESSES by LICENSEE
         which is contracted for by a non-AFFILIATE third party, less the
         deductions stated in Sections 1.8(a), (b) and (c); provided, however,
         that such amounts shall only be included in SERVICE INCOME if LICENSEE
         does not [*** Redacted] with respect to the PATENT RIGHTS licensed in
         this Agreement on the NET SALE of such LICENSED PRODUCTS or the NET
         SALE of LICENSED PRODUCTS made in accordance with such use of the
         LICENSED PROCESSES. SERVICE INCOME shall specifically exclude any [***
         Redacted], payments in consideration for the [*** Redacted] of the
         LICENSEE or third parties, including the [*** Redacted] made in good
         faith and any[*** Redacted].

         In the event that any service contemplated hereunder includes any
         services other than the utilization of [*** Redacted] or [*** Redacted]
         LICENSEE shall in good faith determine the portion of the payments
         received for such service that are intended as consideration for the
         utilization of [*** Redacted] or [*** Redacted] by LICENSEE, and such
         portion shall be used to determine the SERVICE INCOME for such service.
         In such event, LICENSEE shall promptly deliver to HARVARD a written
         report detailing such calculation, together with a copy of the
         applicable provisions of the agreements related to such service.  All
         such reports and provisions of agreements shall be deemed Confidential
         Information of LICENSEE subject to Section 11.1.  In the event that
         HARVARD disagrees with the determination made by LICENSEE of SERVICE
         INCOME for such service, HARVARD shall so notify LICENSEE in writing,
         and a representative of LICENSEE  and a representative of HARVARD shall
         meet in order to discuss and resolve such disagreement.  If such
         disagreement cannot be resolved within sixty (60) days, such
         disagreement shall be subject to resolution in accordance with
         paragraph 11.10.

*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                                                               3

<PAGE>

1.11     SUBLICENSE INCOME: the amount paid to LICENSEE by a third party (other
         than an AFFILIATE of LICENSEE) for the granting of a sublicense under
         Section 3.1, including but not limited to (i) [*** Redacted], (ii) [***
         Redacted], (iii) [*** Redacted] and (vi) the [*** Redacted] in cash of
         any non-cash consideration for such sublicense, but specifically
         excluding any [*** Redacted] payments in consideration for the
         [*** Redacted], [*** Redacted] and any [*** Redacted]. It is understood
         and agreed that sublicense income received by LICENSEE shall be net of
         withholding taxes.

         If LICENSEE sublicenses [*** Redacted] to a third party and at the same
         time also grants such third party rights to [*** Redacted] or [***
         Redacted] then all compensation received from the third party for such
         rights shall be combined and [*** Redacted] that would constitute
         SUBLICENSE INCOME  under Section 1.11 and shall promptly deliver to
         HARVARD a written report detailing such calculation, together with a
         copy of the applicable provisions of the agreements with the third
         party. All such reports and provisions of agreements shall be deemed
         Confidential Information of LICENSEE subject to Section 11.1.  In the
         event that HARVARD disagrees with the determination made by LICENSEE of
         SUBLICENSE INCOME, HARVARD shall so notify LICENSEE in writing, and a
         representative of LICENSEE and a representative of HARVARD shall meet
         in order to discuss and resolve such disagreement. If such disagreement
         cannot be resolved within sixty (60) days, such disagreement shall be
         subject to resolution in accordance with Section 11.10.

1.12     TERRITORY: Worldwide.

1.13     VALID CLAIM: either (i) a claim of an issued patent that has not
         expired or been held unenforceable or invalid by an agency or a court
         of competent jurisdiction, and which has not been admitted to be
         invalid or unenforceable through reissue, disclaimer or otherwise;
         provided, however, that if the holding of such court or agency is later
         reversed by a court or agency with overriding authority, the claim
         shall be reinstated as a Valid Claim with respect to Net Sales made
         after the date of such reversal, of (ii) a claim of a pending patent
         application that has not been abandoned or finally rejected without the
         possibility of appeal or re-filing and that has been pending for less
         than five (5) years from its priority date, and is being actively
         prosecuted in good faith.

1.14     The terms "Public Law 96-517" and "Public Law 98-620" include all
         amendments to those statutes.

1.15     The terms "sold" and "sell" include, without limitation, leases and
         other dispositions and similar transactions.


*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                                                               4
<PAGE>

1.16     RELATED LICENSE AGREEMENTS: Other patent license agreements between
         LICENSEE and HARVARD licensing patent rights known internally at
         HARVARD as Case #1852, #1765, #1923, #1924, #1678, #1641, #1489, #1352,
         #1243, #1137, #1816, #1865, and #1935 to LICENSEE.

1.17     R&D SPENDING, MINIMUM INVESTMENT: shall have the meanings as set forth
         in Section 4.5.

1.18     DEVELOPMENT PAYMENT: DEVELOPMENT PAYMENTS shall mean (a) any payments,
         in consideration for, or to support, research and/or development
         efforts by LICENSEE and (b) any reimbursement of expenses including
         without limitation patent expenses.

                                   ARTICLE II
                                    RECITALS

2.1      HARVARD is owner (or HARVARD will be owner) by assignment from
         Charles Lieber and Piedong Yang of their entire right, title and
         interest in United States Patents 5,897,584, issued April 27, 1999 and
         6,036,774 issued March 14, 2000 entitled Metal Oxide Nanorods (Harvard
         Case #1243), in the foreign patent applications corresponding thereto,
         and in the inventions described and claimed therein.

2.2      HARVARD has the authority to issue license under PATENT RIGHTS.

2.3      HARVARD is committed to the policy that ideas or creative works
         produced at HARVARD should be used for the greatest possible public
         benefit, and believes that every reasonable incentive should be
         provided for the prompt introduction of such ideas into public use, all
         in a manner consistent with the public interest.

2.4      LICENSEE intends to use commercially reasonable efforts to develop the
         invention(s), and to bring to market at least one product falling
         within the definition of LICENSED PRODUCT or otherwise embodying the
         subject matter described or claimed in the patents rights licensed
         under such agreements.

2.5      LICENSEE is desirous of obtaining an exclusive license in the TERRITORY
         in order to practice the above-referenced in invention covered by
         PATENT RIGHTS in the United States and in certain foreign countries,
         and to manufacture, use and sell in the commercial market the products
         made in accordance therewith, and HARVARD is desirous of granting such
         a license to LICENSEE in accordance with the terms of this Agreement.

                                  ARTICLE III
                                GRANT OF RIGHTS

3.1      HARVARD hereby grants to LICENSEE and LICENSEE accepts, subject to the
         terms and conditions hereof, an exclusive (except as set forth in
         Sections 3.2(a) and 3.2(b) license under PATENT RIGHTS in the TERRITORY
         and in the FIELD (i) to make and have made, to use and have used, to
         sell and have sold, to offer for sale, import, export, or


                                                                               5

<PAGE>
         otherwise distribute the LICENSED PRODUCTS, (ii) to practice the
         LICENSED PROCESSES, and (iii) to otherwise fully exploit the PATENT
         RIGHTS, and (iv) to have the foregoing performed on behalf of LICENSEE
         by a third party, in each case for the life of the PATENT RIGHTS. The
         foregoing license under PATENT RIGHTS shall include the full right to
         grant sublicenses, and LICENSEE shall promptly provide copies of any
         sublicenses of PATENT RIGHTS to HARVARD for its review. Unless HARVARD
         has rendered the license under PATENT RIGHTS non-exclusive under
         Section 3.2 (d), HARVARD agrees that it will not grant licenses under
         PATENT RIGHTS to others, nor make, use, sell, offer for sale, import or
         otherwise exploit PATENT RIGHTS itself except as required by HARVARD's
         obligations in Section 3.2 (a) or as permitted in Section 3.2 (b).

3.2      The granting and exercise of this license is subject to the following
         conditions:

         (a)      HARVARD's "Statement of Policy in Regard to Inventions,
                  Patents and Copyrights," dated August 10, 1998, Public Law
                  96-517 and Public Law 98-620, and HARVARD's obligations under
                  prior or current agreements with other sponsors of research
                  and, with regard to continuations-in-part. contained in the
                  PATENT RIGHTS, any future agreements with other sponsors of
                  research related to such continuations-in-part. Any right
                  granted in this Agreement greater than that permitted under
                  Public Law 96-517, or Public Law 98-620, shall be subject to
                  modification to the extent required to conform to the
                  provisions of those status.

         (b)      HARVARD reserves the right to make and use, and grant to other
                  non-profit or governmental institutions non-exclusive licenses
                  to make and use, in each case solely for ACADEMIC RESEARCH
                  PURPOSES the subject matter described and claimed in PATENT
                  RIGHTS. HARVARD shall promptly notify LICENSEE of any rights
                  granted to any third party (other than the U.S. government)
                  under Sections 3.2(a) and (b).

         (c)      LICENSEE shall use commercially reasonable efforts to effect
                  introduction into the commercial market at least one product
                  falling within the definition of LICENSED PRODUCT or
                  otherwise embodying the subject matter described or claimed in
                  PATENT RIGHTS, consistent with sound and reasonable business
                  practice and judgment; thereafter, until the expiration of
                  this Agreement, LICENSEE shall use commercially reasonable
                  efforts to endeavor to keep any such product reasonably
                  available to the public so long as it shall be a sound and
                  reasonable commercial practice to do so.

         (d)      At any time after five (5) years from the effective date of
                  this Agreement, HARVARD may render this license non-exclusive
                  if LICENSEE has not:

                  (i)               used commercially reasonable efforts to put
                           the licensed subject matter into commercial use in
                           one or more of the countries hereby licensed,
                           directly or through a sublicense; nor


                                                                               6

<PAGE>

                  (ii)              used commercially reasonable efforts to keep
                           products falling within the definition of LICENSED
                           PRODUCT or otherwise embodying the subject matter
                           described or claimed in PATENT RIGHTS reasonably
                           available to the public so long as it shall be a
                           sound and reasonable commercial practice to do so;
                           nor

                  (iii)             engaged in research, development,
                           manufacturing, marketing or sublicensing activity
                           that is commercially reasonably appropriate to
                           achieving Section 3.2(d)(i) or 3.2(d)(ii).

                  LICENSEE shall be deemed to have satisfied Section
                  3.2(d)(iii), and HARVARD shall not render the license of
                  PATENT RIGHTS granted hereunder non-exclusive, if LICENSEE'S
                  R&D SPENDING exceeds the MINIMUM INVESTMENT for such year as
                  set forth in Section 4.5.

         (e)      In all sublicenses granted by LICENSEE hereunder, LICENSEE
                  shall include a requirement that the sublicensee use
                  commercially reasonable efforts to put the subject matter of
                  the sublicense into commercial use, provided that such
                  sublicensee is authorized to develop and sell to the public a
                  new product covered by PATENT RIGHTS on its own behalf.
                  LICENSEE shall further provide that such sublicenses are
                  subject and subordinate to the terms and conditions of this
                  Agreement, except for the rate of royalty on NET SALES paid by
                  such sublicensee to the LICENSEE. Copies of all sublicense
                  agreements hereunder shall be provided promptly to HARVARD.
                  All sublicense agreements of LICENSEE provided to HARVARD
                  shall deemed Confidential Information of LICENSEE subject to
                  Section 11.1.

         (f)      At any time eight (8) years after the effective date of this
                  Agreement, if LICENSEE is unable or unwilling to grant
                  sublicenses, either as suggested by HARVARD or by a potential
                  sublicensee or otherwise, then HARVARD may directly license
                  such potential sublicensee, but only if: (i) LICENSEE is not
                  currently pursuing development of LICENSED PRODUCTS for the
                  same application as contemplated by the potential sublicensee,
                  or LICENSEE commits to do so within a two-year period, (ii)
                  the granting of such a license by HARVARD to the potential
                  sublicensee will increase the availability of useful products
                  to the public, (iii) the granting of such license by HARVARD
                  will not materially adversely affect LICENSEE'S then current
                  business or reasonably foreseeable future business (e.g., such
                  license is not intended for an application competitive with
                  LICENSEE) and (iv) HARVARD notifies LICENSEE of its intention
                  to grant such license and permits LICENSEE a reasonable period
                  to negotiate a sublicense on its own.

         (g)      To the extent required by law, during the period of
                  exclusivity of this license in the United States, LICENSEE
                  shall cause any LICENSED PRODUCT produced for sale in the
                  United States to be manufactured substantially in the United
                  States.

3.3      All rights reserved to the United States Government and others under
         Public Law 96-517, and Public Law 98-620, shall remain and shall in no
         way be affected by this Agreement.


                                                                               7

<PAGE>

3.4      HARVARD shall promptly notify LICENSEE when any new patent or patent
         application arises from (i) research conducted in the laboratory of
         Dr. Lieber or Dr. Park, or (ii) improvements made by HARVARD under the
         direction of Dr. Lieber or Dr. Park on the subject matter described in
         PATENT RIGHTS. If LICENSEE so requests and the intellectual property is
         available for licensing, HARVARD will evaluate in good faith LICENSEE'S
         proposal along with proposals received from any third parties. Any
         decision to grant a license to LICENSEE shall be subject to approval by
         HARVARD'S Committee on Patents and Copyrights. In the event LICENSEE
         and HARVARD cannot agree on terms for a license to any new intellectual
         property which is dominated by PATENT RIGHTS, HARVARD shall not offer
         any third party terms more favorable than the terms offered to
         LICENSEE.

                                   ARTICLE IV
                                    ROYALTIES

4.1      LICENSEE shall pay to HARVARD a non-refundable license royalty fee in
         the sum of [*** Redacted] dollars ($[*** Redacted]) upon execution of
         this Agreement.

4.2      As consideration for the rights granted hereunder, LICENSEE shall pay
         to HARVARD a non-refundable fee in the form of stock of LICENSEE as
         follows:

                  (i)     LICENSEE shall issue to HARVARD [*** Redacted]
                          ([*** Redacted]) fully vested shares, at a price per
                          share of $0.001 per share and an aggregate value of
                          $[*** Redacted] of LICENSEE'S common stock which
                          represent [*** Redacted] percent ([*** Redacted]%) of
                          the reserved shares for founders (total 3.2 million
                          shares) shown on the capitalization table of LICENSEE
                          attached as Appendix B ("Shares") upon execution of
                          this Agreement, provided, however, that HARVARD shall
                          be subject to and enter into (1) appropriate
                          agreements and related documents as required of other
                          stockholders of LICENSEE, including without limitation
                          a Common Stock Purchase Agreement, and (2) a Voting
                          Agreement by and among the LICENSEE, HARVARD and
                          certain other holders of common stock of LICENSEE
                          dated as of even date hereof.

                  (ii)     HARVARD'S ownership rights to Shares shall not be
                           affected should the license pursuant to this
                           Agreement be terminated by LICENSEE or HARVARD.

4.3(a)   LICENSEE shall pay to HARVARD during the term of this Agreement a
         royalty on NET SALES by LICENSEE according to the following schedule:

                  (i)      [*** Redacted]% of NET SALES by LICENSEE in [***
                           Redacted] applications;

                  (ii)     [*** Redacted]% of NET SALES by LICENSEE in [***
                           Redacted] applications; or

*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                                                               8

<PAGE>

                  (iii)    [*** Redacted]% of NET SALES by LICENSEE in [***
                  Redacted] applications.

                  In the event, any NET SALES by LICENSEE reasonably falls
                  within more than one of categories (i) to (iii) above,
                  LICENSEE shall pay to HARVARD the lowest applicable royalty
                  set forth in such categories.

         (b)      For each LICENSED PRODUCT sold by LICENSEE, LICENSEE may
                  credit up to [*** Redacted] ([*** Redacted]) of royalties that
                  LICENSEE is paying to third parties (or HARVARD under
                  agreements not included within section 4.3(c)) on LICENSEE'S
                  sales of that LICENSED PRODUCT, provided that the royalty paid
                  to HARVARD shall not be reduced below [*** Redacted] percent
                  ([*** Redacted]%) of the NET SALES of that LICENSED PRODUCT
                  for which such third party royalties are being paid.

         (c)      In the event that sales of a LICENSED PRODUCT are subject to
                  the payment of royalties under one or more of the RELATED
                  LICENSE AGREEMENTS or any license agreements with HARVARD with
                  the same effective date as this Agreement, then the total
                  royalty payment due HARVARD under all such agreements
                  including this Agreement shall be at most the royalty payment
                  due under this Section 4.3 on such NET SALE, no matter how
                  many license agreements from HARVARD are involved, and
                  notwithstanding the terms of any such agreement. LICENSEE
                  shall notify HARVARD of the identity of each license agreement
                  that includes patent rights covering the product or process,
                  and HARVARD shall distribute the royalties evenly among such
                  agreements, including this Agreement.

         (d)      LICENSEE shall pay HARVARD [*** Redacted] percent ([***
                  Redacted]%) of SUBLICENSE INCOME received by LICENSEE for a
                  sublicense of PATENT RIGHTS. If compensation for such a
                  sublicense of PATENT RIGHTS is bundled with compensation
                  received for the sublicensing of the other HARVARD patents
                  rights or other HARVARD intellectual property licensed to
                  LICENSEE under the RELATED LICENSE AGREEMENTS or any
                  agreements with HARVARD having the same effective date as this
                  Agreement, then LICENSEE shall pay HARVARD at most the royalty
                  payment due under this Section 4.3(d) for such SUBLICENSE
                  INCOME no matter how many license agreements from HARVARD are
                  involved, and notwithstanding the terms of any such license
                  agreements. In such a case, LICENSEE shall notify HARVARD of
                  the identity of each license agreement involved and HARVARD
                  shall distribute the royalties equally among those license
                  agreements, including this Agreement.

         (e)      For provision of services under PATENT RIGHTS, LICENSEE shall
                  pay a royalty of [*** Redacted] percent ([*** Redacted]%) of
                  SERVICE INCOME received by LICENSEE from each and every third
                  party ("Third Party") to whom LICENSEE provides such services.
                  In the event any services from which SERVICE INCOME is derived
                  are subject to the payment of royalties under the RELATED
                  LICENSE AGREEMENTS or any agreement with HARVARD having the
                  same effective date as this Agreement, then the total royalty
                  due under all such agreements, including this Agreement, shall
                  be at most the royalty

         *** Confidential treatment requested pursuant to a request for
         confidential treatment filed with the Securities and Exchange
         Commission. Omitted portions have been filed separately with the
         Commission.

                                                                               9



<PAGE>

                  payment due under this Section 4.3 on such services, no matter
                  how many license agreements from HARVARD are involved, and
                  notwithstanding the terms of any such license agreements. In
                  such event, LICENSEE shall notify HARVARD of the identity of
                  each license agreement involved and HARVARD shall distribute
                  the royalties equally among those license agreements,
                  including this Agreement.

         (f)      If the license pursuant to this Agreement is converted to a
                  non-exclusive one under Section 3.2(d) and if another
                  non-exclusive license to any of PATENT RIGHTS is granted or
                  otherwise exists for any field or territory, then the royalty
                  rate of this Agreement shall be adjusted so as not to exceed
                  the royalty rate payable by such other non-exclusive licensee
                  under such PATENT RIGHTS in such field or territory, provided
                  that LICENSEE agrees to amend this Agreement to include terms
                  requested by HARVARD that have been accepted by such other
                  non-exclusive licensee.

         (g)      On sales between LICENSEE and its AFFILIATES for resale, the
                  royalty shall be paid on the NET SALES of the AFFILIATE.

         (h)      In the event that more than one VALID CLAIM within PATENT
                  RIGHTS is applicable to any LICENSED PRODUCT subject to
                  royalties under this Section 4.3, then only one royalty shall
                  be paid to HARVARD in respect of such LICENSED PRODUCT. In no
                  event shall more than one royalty be due to HARVARD with
                  respect to any LICENSED PRODUCT unit; nor shall a royalty be
                  payable under this Section 4.3 with respect to sales of
                  LICENSED PRODUCTS for clinical trials or as samples nor the
                  use of LICENSED PRODUCTS or LICENSED PROCESSES by LICENSEE for
                  such purposes, in each case whether or not in collaboration
                  with a third party.

4.4      No later than January 1 of each calendar year after the effective date
         of this Agreement, LICENSEE shall pay to HARVARD the following
         non-refundable license maintenance royalty and/or advance on royalties.
         Such payments may be credited against running royalties due for that
         calendar year and Royalty Reports shall reflect such a credit. Such
         payments shall not be credited against milestone payments (if any) nor
         against royalties due for any subsequent calendar year.

                  January 1, 2002           $[*** Redacted]
                  January 1, 2003           $[*** Redacted]
                  January 1, 2004           $[*** Redacted]
                  January 1, 2005           $[*** Redacted]
                  January 1, 2006           $[*** Redacted]
                  January 1, 2007           $[*** Redacted]
                  each year thereafter      $[*** Redacted]

4.5      Notwithstanding Section 4.4, the minimum royalty set forth in Section
         4.4 for the years 2002, 2003, and 2004 will be waived if LICENSEE'S
         spending on research and development (LICENSEE'S "R&D SPENDING")
         exceeds the amount set forth below for each category for such year
         (such amounts below, the "MINIMUM INVESTMENT").


*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                                                              10

<PAGE>

<TABLE>
<CAPTION>
                          CHEMICAL AND
                        BIOLOGICAL SENSOR    OPTOELECTRONICS    NANOELECTRONICS
                          APPLICATIONS         APPLICATIONS       APPLICATIONS
                        -----------------    ---------------    ---------------
<S>                     <C>                  <C>                <C>
Year 2002:              $  [*** Redacted]     [*** Redacted]     [*** Redacted]
Year 2003:              $  [*** Redacted]     [*** Redacted]     [*** Redacted]
Year 2004:              $  [*** Redacted]     [*** Redacted]     [*** Redacted]
Year 2005               $  [*** Redacted]     [*** Redacted]     [*** Redacted]
Year 2006               $  [*** Redacted]     [*** Redacted]     [*** Redacted]
Each Year Thereafter    $  [*** Redacted]     [*** Redacted]     [*** Redacted]
</TABLE>

         LICENSEE'S MINIMUM INVESTMENT may be allocated by LICENSEE in any way
         within the three categories set forth above among the different subject
         matter of the RELATED LICENSE AGREEMENTS.

                                    ARTICLE V
                                    REPORTING

5.1      Within six (6) months of the Effective Date, LICENSEE will provide to
         HARVARD a written research and development plan acceptable to
         LICENSEE'S investors under which LICENSEE intends to bring the subject
         matter of the licenses granted hereunder into commercial use upon
         execution of this Agreement. Such plan will include projections of
         sales and proposed marketing efforts. It is understood that LICENSEE
         may provide one research and development plan for all RELATED LICENSE
         AGREEMENTS.

5.2      No later than sixty (60) days after June 30 of each calendar year,
         LICENSEE shall provide to HARVARD a written annual Progress Report
         describing progress on the commercialization of PATENT RIGHTS during
         the most recent twelve (12) month period ending June 30, the amount of
         LICENSEE'S R&D SPENDING relating to the subject matter described or
         claimed in PATENT RIGHTS during such time, and plans for the
         forthcoming year. If multiple technologies are covered by the license
         granted hereunder, the Progress Report shall provide the information
         set forth above for each technology. If progress differs from that
         anticipated in the plan required under Section 5.1, LICENSEE shall
         explain the reasons for the difference and, if appropriate or
         necessary, provide a modified research and development plan for
         HARVARD'S review. It is understood that LICENSEE may provide one
         Progress Report covering all RELATED LICENSE AGREEMENTS.

5.3      LICENSEE shall report to HARVARD the date of its first NET SALE of a
         LICENSED PRODUCT (or the date of its first use of a LICENSED PROCESS
         from which SERVICE INCOME is derived) in each country within thirty
         (30) days of occurrence. It is understood that LICENSEE shall be
         obligated to report the date of first sale of LICENSED PRODUCTS (or the
         first commercial use of LICENSED PROCESSES) under this Section 5.3 only
         once for each country.

*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                                                              11

<PAGE>

5.4       (a) LICENSEE shall submit to HARVARD within sixty (60) days after
          each calendar half year ending June 30 and December 31, a Royalty
          Report setting forth, for the most recent half year that ended on June
          30 or December 31, at least the following information:

                  (i)      the number and identification of LICENSED PRODUCTS
                           sold by LICENSEE that constitute a NET SALE, in each
                           country;

                  (ii)     total amounts received for such LICENSED PRODUCTS;

                  (iii)    an accounting for all LICENSED PROCESSES used or
                           sold;

                  (iv)     deductions applicable to determine the NET SALES
                           thereof;

                  (v)      the amount of SUBLICENSE INCOME received by LICENSEE;

                  (vi)     the amount of SERVICE INCOME received by LICENSEE;
                           and

                  (vii)    the amount of royalty due for such reporting period,
                           or, if no royalties are due to HARVARD for such
                           reporting period, the statement that no royalties are
                           due.

                  Such report shall be certified as correct by an officer of
                  LICENSEE and shall include a listing of all deductions from
                  royalties. It is understood that LICENSEE may submit one
                  Royalty Report covering all RELATED LICENSE AGREEMENTS.
                  However, the Royalty Report shall, for each type of income,
                  provide a detailed listing of the RELATED LICENSE AGREEMENTS
                  that are involved.

         (b)      LICENSEE shall pay to HARVARD with each such Royalty Report
                  the amount of royalty due with respect to such half year. If
                  multiple technologies are covered by the license granted
                  hereunder, LICENSEE shall specify which PATENT RIGHTS are
                  utilized for each category of LICENSED PRODUCTS and/or
                  LICENSED PROCESSES for which royalties are separately reported
                  in the Royalty Report.

         (c)      All payments due hereunder shall be deemed received when funds
                  are credited to HARVARD'S bank account and shall be payable by
                  check or wire transfer in United States dollars. Conversion of
                  foreign currency to U.S. dollars shall be made at the
                  conversion rate existing in the United States (as reported in
                  the New York Times or the Wall Street Journal) on the last
                  working day of each royalty period. No transfer, exchange,
                  collection or other charges shall be deducted from such
                  payments. If legal restrictions block the removal of local
                  currency from any country where a LICENSED PRODUCT is sold,
                  the royalties payable under this Agreement on NET SALES,
                  SERVICE INCOME and SUBLICENSING INCOME earned in such currency
                  in such country shall continue to be reported and accrued, but
                  will not be paid until such currency may be removed from such
                  country.

                                       12

<PAGE>

         (d)      All plans or reports received under Sections 5.1, 5.2, 5.3,
                  5.4 shall deemed Confidential Information of LICENSEE subject
                  to Section 11.1; provided, however, that HARVARD may disclose
                  such information as required by law under Section 11.1 (b),
                  and may include in its usual reports the annual amounts of
                  royalties paid.

         (e)      Late payments shall be subject to a charge of one and one-half
                  percent (1.5%) per month, or $250, whichever is greater.

5.5      In the event of acquisition, merger, change of corporate name, or
         change of make-up, organization, or identity, LICENSEE shall notify
         HARVARD in writing within thirty (30) days of such event.

5.6      If LICENSEE or any of its sublicensees does not qualify as a "small
         entity" as provided by the United States Patent and Trademark Office,
         LICENSEE must notify HARVARD immediately.

                                   ARTICLE VI
                                 RECORD KEEPING

6.1      LICENSEE shall keep accurate records (together with supporting
         documentation) of LICENSED PRODUCTS made, used or sold under this
         Agreement, sufficient to determine the amount of royalties due to
         HARVARD hereunder. Such records shall be retained for at least three
         (3) years following the end of the reporting period to which they
         relate. They shall be available during normal business hours for
         examination, upon HARVARD'S reasonable request, not more than once in
         any twelve (12) month period and upon at least twenty (20) days
         prior notice, by an independent accountant under a duty of
         confidentiality, selected by HARVARD and reasonably acceptable to
         LICENSEE, for the sole purpose of verifying reports and payments under
         Section 5.4. In conducting examinations pursuant to this Section,
         HARVARD'S accountant shall have access to records materially relevant
         to the calculation of royalties under Article IV.

6.2      HARVARD'S accountant shall only disclose to HARVARD whether the reports
         and payments of royalties hereunder are accurate, and the amount of the
         underreporting or underpayment of royalties by LICENSEE, if any.

6.3      Such examination by HARVARD'S accountant shall be at HARVARD'S expense,
         except that if such examination shows an underreporting or underpayment
         in excess of five percent (5%) for any twelve (12) month period, then
         LICENSEE shall pay the reasonable out-of-pocket cost of such
         examination as well as any additional sum that would have been payable
         to HARVARD had the LICENSEE reported correctly, plus interest on said
         sum at the rate of one and one-half percent (1.5%) per month.



                                                                              13

<PAGE>

                                  ARTICLE VII
               DOMESTIC AND FOREIGN PATENT FILING AND MAINTENANCE

7.1      Within 30 days of the closing of LICENSEE'S sale of Series A Preferred
         Stock to venture capital investors, but not later than 60 days after
         the Effective Date, LICENSEE shall reimburse HARVARD for all reasonable
         out-of-pocket expenses HARVARD has incurred for the preparation,
         filing, prosecution and maintenance of PATENT RIGHTS, including for
         counseling with regard to such preparation, filing, prosecution and
         maintenance. Such expenses total [*** Redacted] as of the most recent
         invoice paid by HARVARD. Thereafter, LICENSEE shall reimburse HARVARD
         for all such future expenses upon receipt of quarterly invoices from
         HARVARD. Late payment of these invoices shall be subject to interest
         charges of one and one-half percent (1.5%) per month.

         HARVARD shall be responsible for the preparation, filing, prosecution
         and maintenance of any and all patent applications and patents included
         in PATENT RIGHTS. HARVARD will instruct counsel to directly notify
         HARVARD and LICENSEE and provide them copies of any communications to
         and from the United States and foreign patent offices relating to said
         prosecution, and drafts of all communications to the various patent
         offices, and will instruct counsel to consider any comments on such
         drafts, so that LICENSEE will be informed and apprised of the
         continuing prosecution of patent applications in PATENT RIGHTS.
         LICENSEE shall have reasonable opportunity to participate in decision
         making on key decisions affecting filing, prosecution and maintenance
         of patents and patent applications in PATENT RIGHTS.

7.2      HARVARD and LICENSEE shall cooperate fully in the preparation, filing,
         prosecution and maintenance of PATENT RIGHTS and of all patents and
         patent applications licensed to LICENSEE hereunder, executing all
         papers and instruments or requiring members of HARVARD to execute such
         papers and instruments so as to enable HARVARD to apply for, to
         prosecute and to maintain patent applications and patents in HARVARD'S
         name in any country. Each party shall provide to the other
         prompt notice as to all matters which come to its attention and which
         may affect the preparation, filing, prosecution or maintenance of any
         such patent applications or patents. In particular, LICENSEE must
         immediately notify HARVARD if LICENSEE does not qualify as a "small
         entity" as provided by the United States Patent and Trademark Office.

7.3      LICENSEE may elect to surrender its rights to any patent or patent
         application within PATENT RIGHTS in any country upon sixty (60) days
         written notice to HARVARD. Such notice shall not relieve LICENSEE from
         responsibility to reimburse HARVARD for expenses under Section 7.1
         relating to the filing, prosecution or maintenance of such patent or
         patent application incurred prior to the receipt of the written notice
         by HARVARD (or a longer period if specified in LICENSEE'S notice).


*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.


                                                                              14

<PAGE>

                                  ARTICLE VIII
                                  INFRINGEMENT

8.1      With respect to any PATENT RIGHTS that have not been rendered
         non-exclusive under Section 3.2(d), LICENSEE shall have the right to
         enforce in its own name and at its own expense any patents within such
         PATENT RIGHTS. HARVARD agrees to notify LICENSEE promptly of each
         infringement of such patents of which HARVARD is or becomes aware.

8.2      (a)      If LICENSEE elects to commence an action as described above,
                  HARVARD may, to the extent permitted by law, elect to join as
                  a party in that action. Regardless of whether HARVARD elects
                  to join as a party, HARVARD shall cooperate fully with
                  LICENSEE in connection with any such action, including making
                  available relevant personnel, information, records, papers,
                  samples, specimens and other similar materials for the
                  purposes of such action as reasonably requested by LICENSEE
                  through the Office of Technology and Trademark Licensing at
                  HARVARD.

         (b)      If HARVARD elects to join as a party pursuant to Subsection
                  (a), HARVARD shall jointly control the action with LICENSEE.

         (c)      LICENSEE shall reimburse HARVARD for any out-of-pocket costs
                  HARVARD reasonably incurs, including reasonable attorneys'
                  fees, as part of an action brought by LICENSEE under Section
                  8.1, whether or not HARVARD becomes a co-plaintiff.

8.3      If LICENSEE elects to commence an action as described above, LICENSEE
         may deduct from its royalty payments to HARVARD with respect to the
         patent(s) subject to suit an amount not exceeding fifty percent (50%)
         of LICENSEE'S expenses and costs of such action, including reasonable
         attorneys' fees and reimbursement of amounts under Section 8.2(c)
         above; provided, however, that such reduction shall not exceed fifty
         percent (50%) of the total royalty due to HARVARD with respect to the
         patent(s) subject to suit for each calendar year. If such fifty percent
         (50%) of LICENSEE'S expenses and costs exceeds the amount of royalties
         deducted by LICENSEE for any calendar year, LICENSEE may to that extent
         reduce the royalties due to HARVARD from LICENSEE in succeeding
         calendar years, but never by more than fifty percent (50%) of the total
         royalty due in any one year with respect to the patent(s) subject to
         suit.

8.4      Neither party may enter into a settlement, consent judgment or other
         voluntary final disposition of any suit under Section 8.1, 8.6, 8.7 and
         8.8 without the prior written consent of other party, which consent
         shall not be unreasonably withheld, if such settlement, consent
         judgment or other voluntary final disposition includes any admissions
         or statements about the validity or enforceability of PATENT RIGHTS.

8.5      Recoveries or reimbursements from actions commenced pursuant to this
         Article shall first be applied to reimburse LICENSEE and HARVARD for
         litigation costs not paid from royalties deducted by LICENSEE.


                                                                              15

<PAGE>


         pursuant to Section 8.3. Any remaining recoveries or reimbursements
         shall be shared as follows: 80% to LICENSEE and 20% to HARVARD.

8.6      If LICENSEE elects not to exercise its right to enforce the PATENT
         RIGHTS against any infringement pursuant to this Article, HARVARD may
         do so at its own expense, controlling such action and retaining all
         recoveries therefrom. LICENSEE shall cooperate fully with HARVARD in
         connection with any such action.

8.7      Without limiting the generality of Section 8.6, HARVARD may, at its
         election and by notice to LICENSEE, establish a time limit of ninety
         (90) days for LICENSEE to decide whether to enforce the PATENT RIGHTS
         against any infringement of which HARVARD is or becomes aware. If, by
         the end of such ninety (90) day period, LICENSEE has not commenced such
         an action or taken reasonable efforts to settle such infringement,
         HARVARD may enforce the PATENT RIGHTS against such an infringement at
         its own expense, controlling such action and retaining all recoveries
         therefrom. Notwithstanding sections 8.6 and 8.7, HARVARD shall not
         bring any action alleging the infringement of PATENT RIGHTS against any
         sublicensee of LICENSEE under PATENT RIGHTS, without the consent of
         LICENSEE.

8.8      If a declaratory judgment action is brought naming LICENSEE as a
         defendant and alleging invalidity of any of the PATENT RIGHTS, if both
         parties agree, HARVARD may take over the sole defense of the action at
         its own expense. LICENSEE shall cooperate fully with HARVARD in
         connection with any such action.

8.9      If LICENSEE or any sublicensee, distributor or other customer is sued
         by a third party charging infringement of patent rights that dominate a
         claim of PATENT RIGHTS, with respect to the manufacture, use,
         distribution or sale of LICENSED PRODUCT or practice or use of a
         LICENSED PROCESS, LICENSEE will promptly notify HARVARD. As between the
         parties to this Agreement, LICENSEE will be entitled to control the
         defense in any such action(s) and withhold up to one-half (1/2) of the
         amounts otherwise payable to HARVARD hereunder to pay for defense
         costs, attorneys fees and any liability incurred in such infringement
         suit(s). If Licensee is required to pay a royalty or other amount to a
         third party as a result of a final judgment or settlement, the amounts
         payable to HARVARD hereunder will be reduced as provided in Section 4.3
         above.

                                   ARTICLE IX
                            TERMINATION OF AGREEMENT

9.1      This Agreement, unless terminated as provided herein, shall remain in
         effect until the last patent or patent application in PATENT RIGHTS has
         expired or been abandoned.

9.2      HARVARD may terminate this Agreement as follows:

         (a)      If LICENSEE does not make a payment due hereunder and fails to
                  cure such nonpayment (including the payment of interest in
                  accordance with Section 5.4(e)) within forty-five (45) days
                  after the date of notice in writing of such non-payment by
                  HARVARD. If LICENSEE disputes the amount of such non-payment
                  in writing



                                                                              16

<PAGE>
                  within such forty-five (45) day period, HARVARD shall not have
                  the right to terminate this Agreement until it has been
                  determined in an arbitration proceeding under Section 11.10
                  below that LICENSEE has failed to pay amounts owed hereunder,
                  and thereafter Licensee does not cure such failure within
                  sixty (60) days after such determination. This Section 9.2(a)
                  shall not, however, suspend any obligation of LICENSEE to
                  compensate HARVARD for any undisputed amounts, as provided for
                  under any term of this Agreement, during the pendency of the
                  foregoing arbitration and cure period.

         (b)      If LICENSEE defaults in its obligations under Sections 11.2(c)
                  and 11.2(d) to procure and maintain insurance, and fails to
                  cure such breach within sixty (60) days after notice in
                  writing of such breach by HARVARD.

         (c)      If LICENSEE shall make an assignment for the benefit of
                  creditors, or shall have a petition in bankruptcy filed for or
                  against it, provided that such bankruptcy petition is not
                  dismissed within sixty (60) days after its filing. Such
                  termination shall be effective immediately upon HARVARD giving
                  written notice to LICENSEE.

         (d)      If LICENSEE is convicted of a felony within the United States
                  relating to the manufacture, use, or sale of LICENSED
                  PRODUCTS.

         (e)      Except as provided in Subsections (a), (b), (c), (d) above, if
                  LICENSEE materially breaches any obligations under this
                  Agreement and the breach has not been cured within ninety (90)
                  days after the date of notice in writing of such breach by
                  HARVARD. If LICENSEE disputes in writing that it has
                  materially breached this Agreement within such ninety (90) day
                  period, HARVARD shall not have the right to terminate this
                  Agreement until it has been determined in an arbitration
                  proceeding under Section 11.10 below that LICENSEE has
                  materially breached this Agreement, and thereafter Licensee
                  does not cure such breach within sixty (60) days after such
                  determination. This Section 9.2(e) shall not, however, suspend
                  any obligation of LICENSEE to compensate HARVARD for any
                  undisputed amounts, as provided for under any term of this
                  Agreement, during the pendency of the foregoing arbitration
                  and cure period.

9.3      All sublicenses granted by LICENSEE under this Agreement in compliance
         with the terms and conditions hereof shall survive the termination of
         this Agreement upon the request of the party to whom such sublicense is
         granted, provided that such party agrees in writing that (i) it will
         pay all royalties or other amounts that otherwise would have been due
         thereafter under such sublicense directly to HARVARD rather than
         LICENSEE, and (ii) HARVARD shall not be held liable for the breach or
         the performance of any obligations stated in such sublicense unless
         such obligations have been expressly assumed in writing by HARVARD.

9.4      LICENSEE may terminate this Agreement by giving ninety (90) days
         advance written notice of termination to HARVARD. Upon termination,
         LICENSEE shall promptly


                                                                              17

<PAGE>

         submit a Royalty Report to HARVARD for the final reporting period and
         any royalty payments incurred during such reporting period, and any
         unreimbursed patent expenses under Section 7 that have been invoiced by
         HARVARD, shall become immediately payable with such Royalty Report.

9.5      Articles I, VI, IX, X and XI (except for Section 11.7) of this
         Agreement shall survive termination. Article VIII shall survive with
         respect to any infringement of third parties and/or any lawsuits filed
         by or against LICENSEE, prior to the termination of this Agreement. In
         the event this Agreement is terminated for any reason, LICENSEE may,
         within six months after the effective date of such termination, sell or
         otherwise dispose of all LICENSED PRODUCTS that LICENSEE may have on
         hand on the effective date of such termination, and fulfill any
         contracts requiring the use of LICENSED PRODUCTS and/or LICENSED
         PROCESSES that LICENSEE may have entered into prior to the date of such
         termination, subject to LICENSEE'S payment of amounts due to HARVARD
         under Section 4.3 of this Agreement.

9.6      In the event that after termination of this Agreement, HARVARD licenses
         PATENT RIGHTS to another licensee, HARVARD shall use commercially
         reasonable efforts to require such other licensee to pay the costs of
         the preparation, filing, prosecution and maintenance of PATENT RIGHTS.
         HARVARD shall reimburse LICENSEE for any costs so paid by such other
         licensee to the extent LICENSEE paid for such costs under Section 7.1.

                                   ARTICLE X
                         REPRESENTATIONS AND WARRANTIES

10.1     Except for the rights, if any, of the Government of the United States,
         HARVARD represents and warrants that:

         (a)      HARVARD is the owner of the entire right, title and interest
                  in and to the PATENT RIGHTS as they exist on the Effective
                  Date;

         (b)      HARVARD has the right and authority to enter into this
                  Agreement and grant the rights and licenses set forth herein,
                  including without limitation under PATENT RIGHTS;

         (c)      HARVARD has not previously granted, and will not grant in the
                  future, any rights in the PATENT RIGHTS that are inconsistent
                  with the rights and licenses granted to LICENSEE herein;

         (d)      To the best knowledge of HARVARD without having made an
                  investigation, as of the Effective Date, practice of
                  inventions within the PATENT RIGHTS does not infringe any
                  patent rights, trade secrets or other proprietary rights of
                  any third party,

         (e)      To the best knowledge of HARVARD, as of the Effective Date,
                  HARVARD does not own any rights in any other patent or patent
                  application, the claims of which would


                                                                             18
<PAGE>

                  dominate the claims of a patent or patent application within
                  the PATENT RIGHTS or any practice of PATENT RIGHTS. If HARVARD
                  owns, now or thereafter, any such rights in such patents or
                  patent applications on which Dr. Lieber is an inventor,
                  HARVARD will negotiate in good faith to the extent it has the
                  legal right to do so  with LICENSEE to grant LICENSEE rights
                  to the extent sufficient to practice PATENT RIGHTS.

         (f)      To the best knowledge of HARVARD, all prior and current
                  agreements between HARVARD and other sponsors of research
                  under which HARVARD has obligations relating to PATENT RIGHTS
                  are listed on Appendix C.

10.2     Except as set forth in this Agreement, HARVARD does not warrant the
         validity of the PATENT RIGHTS licensed hereunder and makes no
         representations whatsoever with regard to the scope of the licensed
         PATENT RIGHTS or that such PATENT RIGHTS may be exploited by LICENSEE,
         an AFFILIATE, or sublicensee without infringing other patents.

10.3     EXCEPT FOR THE WARRANTIES STATED IN THIS AGREEMENT, HARVARD EXPRESSLY
         DISCLAIMS ANY AND ALL IMPLIED OR EXPRESS WARRANTIES AND MAKES NO
         EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY
         PARTICULAR PURPOSE OF THE PATENT RIGHTS OR INFORMATION SUPPLIED BY
         HARVARD, LICENSED PROCESSES OR LICENSED PRODUCTS CONTEMPLATED BY THIS
         AGREEMENT.

                                   ARTICLE XI
                                    GENERAL

11.1     (a)      The parties may, from time to time, in connection with this
                  Agreement disclose to each other Confidential Information. Any
                  Confidential Information shall be in writing and marked
                  "confidential" and disclosed only to the Office of Technology
                  and Trademark Licensing. As used in the this Agreement,
                  "Confidential Information" of a party shall mean (i) any
                  information disclosed in writing by such party to the other
                  party, which is marked by such party with the legend
                  "CONFIDENTIAL" or other similar legend sufficient to identify
                  the information as its confidential information, (ii) any
                  information disclosed orally by such party to the other party
                  which is identified as confidential at the time of disclosure
                  and is confirmed as confidential in writing within thirty (30)
                  days after such time of disclosure, or (iii) any information
                  deemed Confidential Information under the terms of this
                  Agreement. With respect to categories (i) and (ii) above,
                  "Confidential Information" shall not include any information
                  that is: (1) already known to the receiving party at the time
                  of disclosure hereunder, or (2) now or hereafter becomes
                  publicly known other than through acts or omissions of the
                  receiving party, or (3) is disclosed to the receiving party by
                  a third party under no obligation of confidentiality to the
                  disclosing party or (4) is independently developed by the
                  receiving party without use of the Confidential Information of
                  the disclosing party.


                                                                              19

<PAGE>

         (b)      Each party shall maintain in confidence, and shall not use for
                  any purpose or disclose to any third party, the Confidential
                  Information of the other party. Notwithstanding the foregoing,
                  the receiving party may use or disclose the Confidential
                  Information of the disclosing party (i) to the extent
                  necessary to exercise its rights or fulfill its obligations
                  and/or duties under this Agreement, and (ii) to comply with
                  applicable law or governmental regulations or court order,
                  provided that the receiving party will give reasonable advance
                  notice to the disclosing party, and will use its reasonable
                  efforts to minimize the disclosure of Confidential Information
                  and to secure confidential treatment of any Confidential
                  Information disclosed.

         (c)      The terms of this Agreement shall be deemed "Confidential
                  Information" of both parties. In addition to the permissible
                  disclosures set forth in subsection (b) above, LICENSEE may
                  disclose such terms in confidence to its financial and legal
                  advisors, consultants, potential or actual investors,
                  potential or actual merger or acquisition partners, and others
                  on a need-to-know basis.

11.2     (a)      LICENSEE shall indemnify, defend and hold harmless HARVARD and
                  its current or former and future directors, governing board
                  members, trustees, officers, faculty and employees
                  (collectively, the "INDEMNITEES"), from and against any
                  lawsuit or cause or action against the INDEMNITEES brought by
                  a third party (collectively, "Claims"), based upon, arising
                  out of, or otherwise relating to this Agreement, including
                  without limitation any cause of action relating to product
                  liability concerning any product, process, or service made,
                  used or sold pursuant to any right or license granted under
                  this Agreement, except to the extent such Claims arise out of
                  or otherwise relate to the gross negligence or intentional
                  misconduct of any INDEMNITEES; and further provided that (i)
                  LICENSEE receives prompt notice of any such Claims; (ii)
                  LICENSEE is given the exclusive right to control the defense
                  and settlement of such Claims; and (iii) LICENSEE shall not be
                  obligated to indemnify any INDEMNITEE in connection with any
                  settlement for any Claim unless LICENSEE consents in writing
                  to such settlement.

         (b)      LICENSEE shall, at its own expense, defend against any actions
                  brought or filed against any INDEMNITEE hereunder with respect
                  to the subject of indemnity contained herein, whether or not
                  such actions are rightfully brought.

         (c)      Beginning at the time any such product, process or service is
                  being commercially distributed or sold (other than for the
                  purpose of obtaining regulatory approvals) by LICENSEE or by a
                  SUBLICENSEE, AFFILIATE or agent of LICENSEE, LICENSEE shall,
                  at its sole cost and expense, procure and maintain commercial
                  general liability insurance in amounts not less than [***
                  Redacted] per incident and [*** Redacted] annual aggregate and
                  naming the Indemnitees as additional insureds. During clinical
                  trials of any such product, process or service, LICENSEE
                  shall, at its sole cost and expense, procure and maintain
                  commercial general liability insurance in such equal or lesser
                  amount as HARVARD shall require, naming the Indemnitees as
                  additional insureds. Such commercial general liability
                  insurance shall provide: (i) product liability coverage; and
                  (ii) broad form contractual liability coverage for LICENSEE'S
                  indemnification under this Agreement. If LICENSEE elects to
                  self-

*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                                                              20

<PAGE>
                  insure all or part of the limits described above (including
                  deductibles or retentions which are in excess of [***
                  Redacted] annual aggregate) such self-insurance program must
                  be acceptable to HARVARD and the Risk Management Foundation of
                  the Harvard Medical Institutions, Inc. in their sole
                  discretion. The minimum amounts of insurance coverage required
                  shall not be construed to create a limit of LICENSEE's
                  liability with respect to its indemnification under this
                  Agreement.

         (d)      LICENSEE shall provide HARVARD with written evidence of such
                  insurance upon request of HARVARD. LICENSEE shall provide
                  HARVARD with written notice at least fifteen (15) days prior
                  to the cancellation, non-renewal or material change in such
                  insurance; if LICENSEE does not obtain replacement insurance
                  providing comparable coverage within such fifteen (15) day
                  period, HARVARD shall have the right to terminate this
                  Agreement in accordance with Section 9.2(b).

         (e)      LICENSEE shall maintain such commercial general liability
                  insurance beyond the expiration or termination of this
                  Agreement during: (i) the period that any product, process, or
                  service, relating to, or developed pursuant to, this Agreement
                  is being commercially distributed or sold by LICENSEE or by a
                  sublicensee, AFFILIATE or agent of LICENSEE; and (ii) a
                  reasonable period after the period referred to in Subsection
                  (e)(i) above which in no event shall be less than fifteen
                  (15) years.

11.3     Nothing in this Agreement shall be construed as conferring any right to
         use HARVARD's name or insignia, or any adaptation of them, or the name
         of any of HARVARD's inventors in any advertising, promotional or sales
         literature without the prior written approval of HARVARD, or the
         inventor in the case of the use of the name of an inventor.

11.4     Except as stated in this Section 11.4, without the prior written
         approval of HARVARD in each instance, neither this Agreement nor the
         rights granted hereunder shall be transferred or assigned in whole or
         in part by LICENSEE to any person whether voluntarily or involuntarily,
         by operation of law or otherwise. LICENSEE may transfer or assign this
         Agreement and all rights hereunder, upon notice to HARVARD but without
         its consent, to any entity that succeeds to all or substantially all of
         the business of LICENSEE to which this Agreements pertains, whether by
         merger, operation of law, purchase or sale of all or substantially all
         of LICENSEE's stock or assets or otherwise; provided that such assignee
         or transferee promptly agrees in writing to be bound by the terms and
         conditions of this Agreement. Subject to the foregoing, this Agreement
         shall be binding upon the respective successors, legal representatives
         and assignees of HARVARD and LICENSEE.

11.5     The interpretation and application of the provisions of this Agreement
         shall be governed by the laws of the Commonwealth of Massachusetts.

11.6     LICENSEE shall comply with all applicable laws and regulations. In
         particular, it is understood and acknowledged that the transfer of
         certain commodities and technical data is subject to United States laws
         and regulations controlling the export of such commodities and
         technical data, including all Export Administration Regulations of the
         United States Department of Commerce. These laws and regulations among
         other things, prohibit or

*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                                                              21

<PAGE>

         require a license for the export of certain types of technical data to
         certain specified countries. LICENSEE hereby agrees and gives written
         assurance that it will comply with all United States laws and
         regulations controlling the export of commodities and technical data,
         that it will be solely responsible for any violation of such by
         LICENSEE or its AFFILIATES or sublicensees, and that it will defend and
         hold HARVARD harmless in the event of any legal action of any nature
         occasioned by such violation with respect to LICENSED PRODUCTS.

11.7     LICENSEE agrees: (i) to obtain all regulatory approvals required for
         the manufacture and sale of LICENSED PRODUCTS and LICENSED PROCESSES;
         and (ii) to mark LICENSED PRODUCTS with the numbers of the applicable
         patents within PATENT RIGHTS, to the extent required by law. LICENSEE
         also agrees to register or record this Agreement as is required by law
         or regulation in any country where the license is in effect, and
         HARVARD shall cooperate fully with LICENSEE in connection with any such
         registration or recordation.

11.8     Any notices to be given hereunder shall be sufficient if signed by the
         party (or party's attorney) giving same and either: (i) delivered in
         person; (ii) mailed certified mail return receipt requested; or (iii)
         faxed to other party if the sender has evidence of successful
         transmission and if the sender promptly sends the original by ordinary
         mail, in any event to the following addresses:

         If to LICENSEE:
           c/o CW Group East
           1041 Third Avenue
           New York, New York 10021
           Attn: Lawrence A. Bock
           Fax: 212/644-0354

         cc: Wilson, Sonsini, Goodrich & Rosati
             650 Page Mill Road
             Palo Alto, California 94304
             Attn: Michael J. O'Donnell, Esq.
             Fax: 650/493-6811

         If to HARVARD:
             Office for Technology and Trademark Licensing
             Harvard University
             Holyoke Center, Suite 727
             1350 Massachusetts Avenue
             Cambridge, MA 02138
             Fax: (617)495-9568

         By such notice either party may change their address for future
         notices.

                                                                              22

<PAGE>

         Notices delivered in person shall be deemed given on the date
         delivered. Notices sent by fax shall be deemed given on the date faxed.
         Notices mailed shall be deemed given on the date postmarked on the
         envelope.

11.9     Should a court of competent jurisdiction later hold any provision of
         this Agreement to be invalid, illegal, or unenforceable, and such
         holding is not reversed on appeal, it shall be considered severed from
         this Agreement. All other provisions, rights and obligations shall
         continue without regard to the severed provision, provided that the
         remaining provisions of this Agreement are in accordance with the
         intention of the parties.

11.10    In the event of any controversy or claim arising out of or relating to
         any provision of this Agreement or the breach thereof, the parties
         shall try to settle such conflict amicably between themselves. Subject
         to the limitation stated in the final sentence of this Section, any
         such conflict which the parties are unable to resolve promptly shall be
         settled through arbitration conducted in accordance with the rules of
         the American Arbitration Association. The demand for arbitration shall
         be filed within a reasonable time after the controversy or claim has
         arisen, and in no event after the date upon which institution of legal
         proceedings based on such controversy or claim would be barred by the
         applicable statute of limitation. Such arbitration shall be held in
         Boston, Massachusetts. The award through arbitration shall be final and
         binding. Either party may enter any such award in a court having
         jurisdiction or may make application to such court for judicial
         acceptance of the award and an order of enforcement, as the case may
         be. Notwithstanding the foregoing, either party may, without recourse
         to arbitration, assert against the other party a third-party claim or
         cross-claim in any action brought by a third party, to which the
         subject matter of this Agreement may be relevant.

11.11    This Agreement constitutes the entire understanding between the parties
         and neither party shall be obligated by any condition or representation
         other than those expressly stated herein or as may be subsequently
         agreed to by the parties hereto in writing.

11.12    Nothing in this Agreement shall be deemed to require LICENSEE to
         exploit the PATENT RIGHTS, except to the extent expressly set forth in
         this Agreement, and nothing in this Agreement shall be deemed to
         prevent LICENSEE from commercializing products similar to or
         competitive with a LICENSED PRODUCT.

11.13    The relationship between HARVARD and LICENSEE established by this
         Agreement is that of independent contractors. Nothing in this Agreement
         shall be construed to create any other relationship between HARVARD and
         LICENSEE. Neither party shall have any right, power or authority to
         assume, create or incur any expense, liability or obligation, express
         or implied, on behalf of the other.

11.14    In the event either party hereto is prevented from or delayed in the
         performance of any of its obligations hereunder by reason of acts of
         God, war, strikes, riots, storms, fires or any other cause whatsoever
         beyond the reasonable control of the party, the party so prevented or
         delayed shall be excused from the performance of any such obligation to
         the extent and during the period of such prevention or delay.

                                                                              23

<PAGE>

11.15    NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY OR TO ANY THIRD PARTY
         FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES
         (INCLUDING LOST OR ANTICIPATED REVENUES OR PROFITS RELATING TO THE
         SAME), ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT, WHETHER SUCH
         CLAIM IS BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE,
         EVEN IF AN AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS ADVISED OF THE
         POSSIBILITY OF LIKELIHOOD OF SAME.

11.16    This Agreement may be executed in counterparts, each of which shall be
         deemed an original, but both of which together shall constitute one and
         the same instrument.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
         executed by their duly authorized representatives.

         PRESIDENT AND FELLOWS
         OF HARVARD COLLEGE                                  COMPANY

              /s/ Joyce Brinton                         /s/ Lawrence A. Bock
---------------------------------------------        ---------------------------
           Joyce Brinton, Director                           Signature
Office for Technology and Trademark Licensing

            10/2/01                                       Lawrence A. Bock
         ------------                                ---------------------------
             Date                                               Name

                                                          President and CEO
                                                     ---------------------------
                                                                Title

                                                              10/3/01
                                                         -------------------
                                                                 Date

                                                                              24

<PAGE>

                                   APPENDIX A

The following comprise PATENT RIGHTS:

US Patent 5,897,945, issued 4/27/99, US Patent 6,036,774, issued 3/14/00 and
pending applications in Japan, France and the United Kingdom


                                                                              25

<PAGE>

                                   APPENDIX B

NANOSYS, INC. CAPITALIZATION TABLE - CONFIDENTIAL

FOUNDERS' STOCK (Common Stock Capitalization Before Series A Preferred Stock
Financing)

<TABLE>
<CAPTION>
                        % of Founders Stock    # of Shares of Common Stock        Amount Invested
                        -------------------    ---------------------------    --------------------
<S>                     <C>                    <C>                            <C>          <C>
Charles Lieber #               11.0%                                            550,000    $   550
Hongkun Park #                  9.0%                                            450,000    $   450
Michael Evans +                 2.0%                                            100,000    $   100
CW Group *                     12.0%                                            600,000    $   600
Other advisors (tbd)            2  %                                            100,000    $   100
Reserve                        64.0%                                          3,200,000    $ 3,200
Total Common Shares           100.0%                                          5,000,000    $ 5,000
</TABLE>

PROPOSED SERIES A PREFERRED
STOCK

<TABLE>
<S>                                <C>                    <C>
Investors as a group               5,000,000-6,666,667    $  1,500-2,000,000
Total Series A Preferred Shares    5,000,000-6,666,667    $  1,500-2,000,000
</TABLE>

# Founders stock will vest monthly over a five year period

+ Evans shares will be fully vested

* Shares will be issued in the form of an option


                                                                              26

<PAGE>

                                   APPENDIX C

<TABLE>
<CAPTION>

CASE     LEAD INVENTOR     REPORT DATE            TITLE                    AGENCY              GRANT NUMBERS
----    ---------------    -----------    --------------------    ------------------------    ----------------
<S>     <C>                <C>            <C>                     <C>                         <C>
1243    Lieber, Charles      2/8/96       Metal Oxide Nanorods     NSF                        DMR-94-00396
1243    Lieber, Charles      2/8/96       Metal Oxide Nanorods     Office of Naval Research   N00014-94-1-0302
</TABLE>